Editor’s note: This article was first published in January 2014, and the Nestor share prices it cites are mid-January 2014 figures. Google’s $3.2 billion purchase of Nest Labs, described here as a rumour, was in fact announced on 13 January 2014.
Someday someone will make a comedy about the things that happen on the stock market, and with good reason, even with all the drama involved and the suspicions it raises. A company on Wall Street, on the OTC market (also known as the penny-stock market), has shot up 4,900% out of nowhere.
Investors confused Nestor, Inc., the company behind this dizzying rise, with Nest, a company that in recent days has been the subject of rumours about its purchase by Google.
Once the mistake came to light, investors started dumping shares as fast as they could, sending the price tumbling from a peak of $0.10 to $0.038. Even so, the stock is still up 1,752% from its price before the mix-up ($0.002). That is still outrageous, considering that the company has nothing to do with Google and no reason to explain any rise (at least none that we know of).
This is not the first time investors have got it wrong. Before Twitter’s IPO, many investors started buying another listed company that had nothing to do with it.
Of course, this has raised plenty of suspicion among Wall Street’s regulators, because it seems that many investors bought large amounts of Nestor shares even before the rumours of Google’s interest in buying Nest for $3.2 billion became known.
This means that, despite the SEC’s efforts, insider trading is still the order of the day on the stock markets. In this case, though, inside information did not prevent the clumsiness of some investors or, more likely, the cunning of many others who took advantage of the confusion to make a fortune.
One thing is clear: anyone who bought near the $0.10 peak is not getting their money back.
Featured image: Raysonho @ Open Grid Scheduler / Grid Engine, CC0 1.0, via Wikimedia Commons.
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